HIGHLIGHTS, SUMMARY, AND CONCLUSIONS 



Objective and Method of Analysis 



The. objective of this study was to evaluate the economics of various uses 

 and cost allocation of surface-water resources in southern New Hampshire. A 

 linear programming model for a river basin was developed to include almost 

 all water-related economic activity for both consumers and producers. The 

 model was so designed that the entire basin or basin subdivision could be 

 analyzed. Within each area, externalities were internalized. The model included 

 seven sectors: (1) rural domestic, (2) private water-based recreation, (3) public 

 water-based recreation, (4) agriculture and forestry production, (5) intensive 

 residential, (6) urban, and (7) industrial. In addition, a public (government) 

 and a private sector were identified. 



More than nine water-related, objective function criteria could be optimized. 

 These included: (1) private consumer benefits, (2) private production benefits, 

 (3) private consumer benefits plus private producer benefits, (4) private cost, 

 (5) public cost, (6) private cost plus public cost, (7) private benefits less private 

 cost, (8) net benefits or private consumer and producer benefits less private and 

 public cost, and (9) environmental quality as measured in minimum biochemical 

 oxygen demand or coliform bacteria count. The research was confined primarily 

 to the Ashuelot River Basin, in four configurations: the northern area, the cen- 

 tral area, the southern area, and the entire basin. 



Three river-flow levels were included in the analysis. These were for the 

 month of August and represented high- (90th percentile), median- (50th percen- 

 tile), and low- (10th percentile) flow levels. The flow levels for July, September, 

 and October exhibited a similar flow-level pattern to August. 



Two river-water quality classifications were analyzed. The classes of water 

 quality in New Hampshire range from A, the highest class, to D, the lowest 

 class. The northern area of the Ashuelot Basin is class B. The central and 

 southern areas were essentially class C but were reclassified B in the late 1960's. 

 The analysis also included projections of population to 1980. 



Conflicts and Objectives Optimized 



The economic basis for conflicts among sectors over the incidence of cost 

 allocation and the level of economic activity can be traced to some chosen 

 objective or goal. The objective of minimizing public cost, or the minimizing 

 of taxes and other publicly raised funds, shifted the cost of providing water 

 supply and waste-water treatment from the public sector to the private sector. 

 When private costs, the costs to industry and consumers, were minimized, 

 the cost of providing water and water treatment was shifted to the public 

 sector. Minimizing public and private cost combined limited economic growth 

 and development as did maximizing environmental quality by minimizing either 

 coliform bacteria or biochemical oxygen demand. Maximizing environmental 

 quality was more costly than minimized public and private cost subject to the 

 water-quality constraints and present economic activity in the basin. 



Maximizing consumer and producer benefits less public and private costs, or 

 maximizing net benefits, provided the most efficient guideline for evaluating 

 various use and cost allocation of surface water and approximated growth 

 potential. Minimizing public and private costs for providing water supply and 



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